Buying a home is a big financial decision, and for many people, obtaining a mortgage is a necessary part of the process. However, once you have a mortgage, you may find yourself struggling to make the monthly payments. Fortunately, there are several steps you can take both before, and after signing on the dotted line to lower your mortgage payment and make your finances more manageable.
Read on to explore four of these strategies!
4 Tips to Make Repayment More Manageable
1. Refinance Your Mortgage
Refinancing your mortgage is one of the most effective ways to lower your monthly payment. When you refinance, you take out a new mortgage with a lower interest rate, which means that you’ll have a lower monthly payment. You may also be able to extend the length of your loan, which can further reduce your payment. However, it’s important to keep in mind that refinancing comes with fees, and you’ll need to calculate whether the savings on your monthly payment will offset these costs.
2. Make a Larger Down Payment
Making a larger down payment when you purchase your home can also help to lower your monthly mortgage payment. The more you put down, the less you need to borrow, which means that your monthly payments will be lower. In addition, if you put down at least 20% of the purchase price, you may be able to avoid private mortgage insurance (PMI), which can add to your monthly payment. If you’re not able to put down 20%, you may want to explore options for getting rid of PMI once you have built up more equity in your home.
3. Consider an Adjustable-Rate Mortgage
An adjustable-rate mortgage (ARM) is a type of mortgage where the interest rate can change over time. Initially, the interest rate is lower than a fixed-rate mortgage, which can make your monthly payment lower. However, the interest rate can increase after a certain period, which can lead to higher payments. If you’re considering an ARM loan, it’s important to understand the terms of the loan and to be prepared for the possibility of higher payments down the line.
4. Negotiate With Your Lender
If you’re struggling to make your monthly mortgage payment, it’s a good idea to reach out to your lender to see if there are any options for reducing your payment. For example, you may be able to negotiate a lower interest rate, which can lower your monthly payment. Some lenders may also offer temporary forbearance or loan modification programs that can provide temporary relief from your payment. Keep in mind that these options may come with additional fees or interest, so it’s important to understand the full terms of any program before agreeing to it.
Final Thoughts
In conclusion, if you’re struggling to make your monthly mortgage payment, there are a handful of options you can utilize to lower it. Refinancing your mortgage, making a larger down payment, considering an adjustable-rate mortgage, and negotiating with your lender.
As with any financial decision, it’s important to carefully weigh the pros and cons of each strategy and to consult with one of our 1st Securities Loan Originators if you have any questions or concerns. By taking a proactive approach to managing your mortgage, you can help ensure that your finances remain stable and that you’re able to enjoy your home for years to come.